Little errors on report can become big headaches without intervention Giving CREDIT Where credit is due

Anyone who has ever bought a house, rented an apartment, refinanced a mortgage or taken a home equity loan knows the importance of good credit. But few borrowers realize the reports determining creditworthiness sometimes contain errors that can become a nightmare to fix, state regulators say.

The three largest national credit reporting agencies failed to correct errors in hundreds of Maryland residents' files last year until prodded to do so by the state, the state found after surveying complaints filed against the agencies in 1993.

A spokesman for Equifax Inc., Trans Union Corp. and TRW Inc. said last week that the agencies have begun reviewing findings by Maryland's Commissioner of Consumer Credit to determine whether to change the way they handle complaints.

The state had to intervene to get corrections for 56 percent of the 1,018 consumers who filed written complaints last year. Corrections were not warranted in 10 percent of the cases. Thirteen percent of those who complained hadn't notified the credit bureaus before complaining to the state. The survey discounted the remaining 21 percent, which fell outside state jurisdiction or did not involve a credit reporting agency.

Results show increases in legitimate complaints against credit file repositories, Commissioner Alan T. Fell said. During the first three months of the year, the number of written complaints rose to 348 from 277 during the first three months of 1993.

"There are going to be errors," Mr. Fell said. "But when there's an error and you call them, they should correct it. The study shows they don't."

During a meeting prompted by the state's survey, Commissioner Fell called on representatives of the three credit bureaus to take steps to better respond to complaints.

But a spokesman for Associated Credit Bureaus Inc., the trade group for the industry, says the state's findings may be less than clear cut. For instance, he said, he questioned how many had complained to the commissioner before the end of the credit bureaus' 30-day response period and how many never got a response at all.

"If there is a problem in Maryland, we want to correct that problem," Norm Magnuson, the trade group's director of public affairs, said last week. "Any complaint should be taken care of at the credit bureau level. That is our goal."

But he said it would be nearly impossible to avoid errors on a percentage of the 2 million files kept on Marylanders.

Some reports confuse people with similar names or addresses or a father and son with the same name, the state's survey showed. Others contain charge accounts that are out-of-date, belong to someone else or show inaccurate balances. Complaints come from people with problem credit as well as from those with perfect credit ratings.

Computerized credit bureaus keep an estimated 450 million files on consumers, processing almost 2 billion bits of information per month from creditors such as banks and department stores. Credit-report problems have become the Federal Trade Commission's top complaint over the past four years.

Karen F. Smith, 28, a bookkeeper for National Capital Orthopedics in Oxen Hill, plans to go to settlement later this month on a two-bedroom house in Edgewater. But she fears an inaccuracy on her credit report could stand in the way.

Even before she applied for a mortgage, her report failed to note she had completed payments on an auto loan in 1991. Questions about the loan resurfaced two weeks ago when she applied for a mortgage. Only after the commissioner's office intervened was she able to get the documentation she needed to prove she'd made the payments. She has forwarded documentation to the credit bureau and hopes the correction comes in time for settlement.

It's not the first time she has found such mistakes. Two years ago, she found herself blocked from opening charge accounts. Her file, she found, showed she owed money to a doctor she'd never seen. One agency's report incorrectly listed her as married and gave the wrong date of birth. It took phone calls and letters -- and, once again, the state's intervention, she said -- to correct the errors.

Harry S. Christiansen, 41, of Crofton, ran into similar problems. When he decided to check his credit report, he found multiple errors from all three agencies, including charge accounts he'd never opened at stores he'd never heard of. They also reported accounts he'd closed years ago.

"I was appalled that people were making decisions on my credit history based on an inaccurate report," he said.

The errors never had interfered with his ability to get credit, but potential for that to occur existed, he feared. It took several letters to correct mistakes, he said. But one item remained in dispute.